Gas Pipeline Dispute
ISLAMABAD: Pakistan has engaged the services of three prominent international law firms—White & Case, Three Crowns, and Willkie Farr Gallagher—to represent it in arbitration proceedings at the Court of Arbitration in Paris.
This move comes in response to a legal dispute initiated by Iran over Islamabad’s failure to complete its portion of the Iran-Pakistan (IP) gas pipeline project, which has faced significant delays.
Reports indicate that these law firms will be aided by a chief counsel based in Australia, recognized as a leading authority in the oil and gas infrastructure sector.
The legal team submitted their credentials to the Paris-based court on October 18, 2024, laying the groundwork for Pakistan’s defense.
Sources from the Law Division and the Attorney General’s Office have confirmed that relevant Pakistani authorities briefed the legal teams on the specifics of the gas pipeline project and the reasons for the delays.
To proceed with the arbitration, Pakistan will appoint an arbitrator, while Iran will select its own. The two nations will jointly nominate a third arbitrator, completing the panel required for the court to hear the case. Once established, the arbitration is expected to conclude within a year.
The backdrop of this legal battle includes a series of warnings issued by Iran. In August 2024, Iran provided a final notice to Pakistan, signaling its intent to seek arbitration due to Islamabad’s inability to construct the pipeline within the extended deadline.
The project has been mired in a decade-long delay attributed to proposed U.S. sanctions and the geopolitical landscape surrounding energy infrastructure in the region.
Originally, the Gas Sales Purchase Agreement (GSPA), signed in 2009, established the framework for the pipeline’s construction and operational timeline.
However, U.S. sanctions complicate Pakistan’s ability to fulfill its obligations under this agreement, with reports suggesting that Pakistani officials have sought waivers from the U.S. government to no avail.
A significant concern is the daily penalty of $1 million Pakistan is liable to pay Iran since January 2015 for failing to comply with the GSPA terms.
The IP gas pipeline project, intended to transport gas from Iran to Pakistan, has long been viewed as vital for Pakistan’s energy needs.
However, the failure to lay down the pipeline has put Pakistan at risk of incurring substantial financial penalties, which could escalate into billions of dollars if the arbitration favors Iran.
The original timeline mandated that the pipeline be operational by January 1, 2015, but repeated delays have led to increasing tensions between the two nations.
In summary, Pakistan’s decision to enlist international legal expertise underscores the complexity of the situation regarding the IP gas pipeline. It highlights the ongoing challenges posed by geopolitical tensions and the struggle for energy security in the region.
I am a dynamic professional, specializing in Peace and Conflict Studies, Conflict Management and Resolution, and International Relations. My expertise is particularly focused on South Asian Conflicts and the intricacies of the Indian Ocean and Asia Pacific Politics. With my skills as a Content Writer, I serve as a bridge between academia and the public, translating complex global issues into accessible narratives. My passion for fostering understanding and cooperation on the national and international stage drives me to make meaningful contributions to peace and global discourse.
